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Editorial

Another ‘loincloth remedy’

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Monday 17th January, 2022

Now, anyone could import rice, paying as little as 25 cents a kilo as duty. Trade Minister Bandula Gunawardena has said the government decision is aimed at preventing a rice shortage and bringing rice prices down. But the question is whether enough foreign exchange is available for rice imports. Minster Gunawardena himself has admitted that there are already 500 freight containers of rice at the Colombo Port pending clearance. The power and energy sectors are in a mega crisis as the country is without enough dollars to pay for fuel imports. Most industries dependent on imported raw materials are struggling to stay afloat; some of them have already gone belly up. Will the Trade Minister or any other SLPP grandee claiming to be well versed in the dismal science explain how forex will be found for rice imports?

The rice shortage and attendant price increases have come about for two reasons. One is the fertiliser shortage, which has resulted in a sharp drop in the Maha yield, and the other is hoarding by big-time millers and wholesalers. The government is not willing to change its fertiliser policy, which has run into stiff resistance from resentful farmers, and it is too impotent to take on the Millers’ Mafia, which has become a law unto itself as politicians benefit from its largesse during elections.

Rice imports are only a band-aid remedy. True, any essential commodity has to be imported in case of a severe shortfall in the domestic supply thereof, but such measures must necessarily be short-term; the government does not seem to know when it will be able to stop rice imports. Unless the fertiliser crisis is resolved urgently, rice imports will go on until the end of time, and several other agricultural products, too, will have to be imported. The country’s food security will be pie in the sky in such an eventuality.

SLPP MP and former President Maithripala Sirisena has, in an interview with Siyatha TV, said he wonders whether there is a move to discourage farmers from engaging in agriculture and drive them to sell their lands to private companies. Multinational corporations have already acquired large extents of land for commercial agriculture here; prominent among them is an international banana producer, which got a foothold here during the previous Rajapaksa government. The present-day leaders seem relentless in their efforts to turn this country into a banana republic.

Meanwhile, let Sirisena be told that his family is also responsible for farmers’ woes; his brother, Dudley, is one of the millers who make unconscionable profits by exploiting both the farmer and the consumer alike; and his relative, State Minister Siripala Gamlath, is also a miller thriving at the expense of the poor paddy farmers and hapless consumers. Shouldn’t he put his own house in order instead of shedding copious tears for farmers and consumers?

Whether the government is working according to a secret plan to make farmers fed up with agriculture, one may not know, but its wrong agricultural policies are fraught with the danger of discouraging the farming community. When farmers suffer massive yield losses, and cannot recover production costs, much less redeem their valuables pawned to raise funds for cultivation purposes, they will be left with no alternative but to vote with their feet. Some of them have already done so, and unless this trend is arrested urgently, the country’s economic crisis will worsen with more dollars having to be spent on food imports. Besides, rural poverty will increase exponentially, and the farmers reduced to penury are likely to migrate to urban centres looking for jobs that are not there. The country may run out of dollars at this rate, and therefore the people will have to starve if imports are promoted as government policy at the expense of the local production of main food items. (We might achieve self-sufficiency only in turmeric!)

The government’s decision to promote imports as a solution to the rice shortage instead of addressing the root causes of the problem is like using a loincloth to control diarrhoea, as a local saying goes.



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Editorial

Challenges seemingly insurmountable

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An internet blogger put it very well when he said that Gotabaya Rajapaksa, a man nobody wants and Ranil Wickremesinghe, a man nobody elected, are in command. We would add that the former obviously assured the latter, possessed of a parliamentary group comprising himself, that he would have the support of the Sri Lanka Podujana Peramuna (SLPP) to form a government. But things are clearly not moving the way GR intended – if he was sincere in his assurances – or the way Wickremesinghe expected when he agreed, as some commentators have said, to place his head on the chopping block. The president could not have been unaware that he does not control the SLPP and it will not necessarily bend to his will. Mahinda Rajapaksa remains influential and Basil Rajapaksa seems to be emerging from the shadows.

There are people who believed that GR expected RW to buy him time for a dignified exit perhaps via a constitutional amendment to abolish the executive presidency. This would take time and require a referendum. He obviously would not have selected a successor to his brother baying for his own blood. What shape the 21st Amendment, due to be examined by party leaders as this is being written, will eventually take nobody knows.; but the required give and take is lacking. The Bar Association and the opposition are clearly opposed to the prepared draft. Whether an acceptable compromise is possible remains dicey at the present moment. As Mr. Karu Jayasuriya, whose name was bandied about as a possibly acceptable prime minister, said last week any further delay in presenting the 21st Amendment will enrage the people. Jayasuriya did not seek the prime ministry but was reportedly willing to accept it for a limited period until the executive presidency was abolished and an election held.

The Galle Face protest is entering its 50th day and there are no signs whatever that its principal demand, GotaGoHome, is close to fruition. The protest did succeed in ensuring that Mahinda Rajapaksa quit. But not before the hopelessly botched attack on the protesters both outside Temple Trees and on the Galle Face green set the country ablaze. Nobody in his right mind will claim that the arson and looting unleashed on SLPP politicians both at national and provincial level were spontaneous. There was clearly an organization behind it and the law enforcers remained bystanders allowing the mayhem. Whether they supported the rioting or merely wanted to distance themselves in the aftermath of the Rambukkana incident where attempts to blame the police were made.

There is little doubt that Ranil Wickremesinghe’s appointment was welcomed by the western nations and their allies. There has been tangible support, notably from India, and pledges of assistance from elsewhere. But there are no free lunches and readers will note a New Delhi datelined report on attempts to ‘solve’ the Katchativu issue.’ Whether the immediate problems of the fuel and gas shortages plus the impending food shortage will be effectively addressed remains to be seen. There have been promises – but who believes them? – of supplies and some positive signs that the queues outside filling stations and gas dealerships are easing. Laugfs is on record saying it was able to open letters of credit and it will be resuming supplies. Litro too is better placed than it was. While there is no magic wand for anybody to wave, there will be massive public relief if there are visible signs that at least the petrol/diesel and gas queues have eased.

The urgency accorded by the administration to prioritize compensation payable to the political victims of the post-Galle Face riots is deeply resented by the public. Questions are asked how many of those whose property was destroyed amassed the resources to acquire them. It is common knowledge that massive corruption in the country’s political class has long been endemic. In such a context, public resentment at what appears to be an unseemly hurry to compensate the victims is natural. The state undoubtedly bears a responsibility of compensating victims as the rioting was a result of a failure of law enforcement. But promised compensation for other sectors of the populations, farmers who suffered crop losses due to the government’s disastrous fertilizer policy for example, have not been paid. Little is done to compensate abjectly poor people whose huts, passing for homes, are destroyed by elephant attacks. So why the hurry to compensate politicians?

Many analysts and commentators are convinced that the country’s economic problems deserve priority over its political difficulties. But the two issues are interconnected. Prime Minister Wickremesinghe is credited by many to possess the ability to better address the economic issues and some favourable movements in the right direction have been discerned since he assumed office. The appointment of the new Central Bank Governor, who like the PM, has laid bare the whole grim scenario has been widely welcomed. So also the ongoing engagement with the International Monetary Fund. But there is going to be no quick fix. Bridging finance to fund essential imports is urgently needed and we have to make our massive debts sustainable. There’s a long haul ahead, worse inflation compelled by continued money printing in the short term and the a clear lack of willingness by our bloated public sector to take a cut in their emoluments in the teeth of the country’s dire predicament.

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Editorial

Political compulsions vs rationality

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Saturday 28th May, 2022

Reports that the public sector workers will be given a pay hike from the budget to be presented in a few weeks have stirred up a lot of controversy. One cannot bring oneself to be critical of a pay hike for workers, but the question is whether the government which is even without funds to pay the public workers their salaries will be able to grant them a pay hike. Is it planning to print more money? The government seems to have got cold feet due to adverse criticism of the alleged offer of a pay hike to the state sector, if a claim attributed to it is anything to go by; it has said the reports of the salary increase at issue are not true. One could only hope that it is telling the truth, for once, and will act sensibly without ruining the economy further.

One of the main reasons why the economy is in a tailspin is excessive money printing, which is the only thing the Rajapaksa government has done efficiently. Some leaders of the present dispensation and their officials went so far as to argue that money printing did not cause an increase in inflation! No wonder the economy deteriorated under the watch of these pundits. The current crisis has come about mainly due to economic mismanagement during the past few years. No less a person than IMF Managing Director Kristalina Georgieva has said the crisis here is owing to mismanagement, and therefore the most important thing to be done is to put the country back on a sound microeconomic footing. Massive tax cuts and duty waivers have caused a steep decline in state revenue. Therefore, besides the worst-ever foreign currency crunch the country is experiencing, there is a huge rupee crisis.

Colossal amounts of money already printed have caused soaring inflation and currency devaluation. Prices increase almost daily, and essentials are prohibitively expensive for most people, who are protesting. It is high time the government stopped printing money haphazardly for politically-motivated programmes, and heeded expert advice. The Central Bank (CB) is struggling to tame the runaway inflation by absorbing excess liquidity; it has increased interest rates by an unprecedented 700 basis points. Such measures are bound to make the economy contract, and adversely impact the private sector with about six million workers, in the short run, however essential they may be to contain inflation and ensure the country’s long-term economic wellbeing. What the CB is performing is a balancing act.

The business community has already warned of job losses in the private sector, and asked for a debt moratorium to prevent the collapse of many small and medium enterprises (SMEs). Yesterday, we quoted Chairperson of the Sri Lanka United National Businesses Alliance, Tania Abeysundara, as having said that around 4.5 million Sri Lankans employed in SMEs might lose their jobs in the coming months unless the government stepped in and assisted the businesses in trouble. This is a frightening proposition.Most workers deserve better pay. But pay hikes must not be politically determined, especially amidst an economic crisis, if further trouble is to be averted. The yahapalana government made the mistake of promising a huge salary increase to the public sector workers before the 2015 presidential election, and implementing its pledge to win the parliamentary polls a few months later, thereby causing an unnecessary stress on the economy. The incumbent administration has already increased the salaries of some categories of public sector employees including teachers and given a special allowance to all state sector workers besides distributing cash by way of relief for political reasons. A general election may have to be held sooner than expected. Let the government be urged to ensure that political compulsions do not overtake rationality in preparing the budget to be presented. The least it can do to help resolve the economic crisis is to leave the task of managing the economy to experts and give them a free hand. Everything it touches turns into a mess.

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Editorial

Running, hunting and flying trapeze

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Friday 27th May, 2022

What was widely expected of the SLPP and the Opposition, by way of their contribution to resolving the current economic crisis, was the formation of a national unity government. Religious dignitaries and civil organisations campaigned hard to bring the warring parties together, and political leaders had the public believe that they were making a serious effort to form a multi-party Cabinet, but the mountain that laboured has brought forth a mouse—a deformed one at that.

Some of the newly-appointed ministers are at daggers drawn. They have turned hostile towards even President Gotabaya Rajapaksa. Ministers Harin Fernando and Manusha Nanayakkara continue to inveigh against the President. Fernando has, at a recent media briefing, repeated some of the allegations he levelled against the President and other members of the Rajapaksa family while he was in the Opposition. He and Nanayakkara are obviously trying to remain in the good books of the irate public by criticising the President and the SLPP while being members of the Rajapaksa government. But the problem with running with the hare and hunting with the hounds is that there comes a time when the person doing so does not know whether he/she is running or hunting.

It is hoped that the ongoing uneasy political cohabitation between the SLPP and a section of the Opposition does not exemplify a local saying about connubiality –– ‘even the shadow of a doomed marriage is crooked’. There should be a healthy relationship between the President and the Cabinet if the government is to be prevented from becoming a two-headed donkey that tries to pull in two different directions simultaneously. A toxic relationship between the President and the Cabinet or some members thereof takes its toll on the performance of a government, as has been our experience. We have witnessed such scenarios twice during the past two decades, or so.

President Chandrika Bandaranaike Kumaratunga and the UNF ministers including Prime Minister Ranil Wickremesinghe fought bitterly from 2001 to 2004. President Kumaratunga had to stomach many indignities at the hands of the UNF ministers. Their enmity stood the LTTE in good stead. President Kumaratunga finally sacked the UNF administration. There was a similar situation from 2015 to 2019; President Maithripala Sirisena and the UNF Cabinet including PM Wickremesinghe hardly did anything other than fighting so much so that the former sought to dislodge the UNP-led government and hold a general election only to be left with egg on his face courtesy of a landmark Supreme Court ruling against his rash executive action. Their clashes rendered the yahapalana government dysfunctional and led to national security being severely compromised; a group of terrorists struck with ease on 21 April 2019, destroying more than 270 lives in churches and hotels, as a result.

Meanwhile, Ministers and high-ranking state officials must not be at loggerheads. The need for a healthy relationship between the Cabinet and the bureaucracy for the country to face challenges, overcome crises and achieve progress cannot be overemphasised. When Basil Rajapaksa was the Finance Minister, it was reported that the then Central Bank (CB) Governor Ajith Nivard Cabraal had not been able to meet him for months to discuss vital issues concerning the economy.

The Finance Minister and the CB Governor are like two aerialists who perform flying trapeze; they must have absolute faith in each other, and be adept at synchronised movements if disaster is to be averted. In the case of Sri Lanka’s economic circus, there is no safety net. A government must not expect the CB Governor to perform monetary pole dancing. One may recall that a CB chief who chose to display his skills on the pole in a bid to entertain his political masters, during the yahapalana government, had to flee the country, in the buff, as it were.

CB officials have recently revealed before the COPE (Committee on Public Enterprises) that they warned of an economic meltdown about two years ago, but their efforts to convince the government of the need to take urgent action to straighten up the economy were in vain. One could only hope that a similar situation will not happen again, and the political authority will listen to expert advice and do what needs to be done urgently to save the economy, and grant relief to the public calling out for help.

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